Why Do Cats Hiss?

Hissing is an act of defense. The cat is issuing a clear warning saying "carry on approaching me at your own risk."

Snakes
are one of the most deadly and feared animals. A cat hissing resembles
a snake that's just about to strike - both facially and in the way its
body moves.

Mimicry - where one animal looks or
acts like another - is common amongst different animal species. Some
cat behavior experts believe that cats hissing came about through mimicry
of snakes and has evolved as a feline defense mechanism.

It's easy to spot the similarities here...

So why do cats hiss and mimic snakes, you may well ask. A cat that's hissing is trying to frighten whatever it's hissing at.
This usually happens either because it's scared of being attacked, so is
trying to "face off" the would-be attacker, or it's showing aggressive behavior as an act of dominance.

A cat that's showing this sort of behavior is a pretty frightening sight (he's intending for it to be).

Don't
approach him - e.g. with your hand stretched out in a gesture of
friendship - you're likely to get bitten and / or scratched

Don't
look direct into his eyes, or look at him wide eyed, as he will
perceive this as an act of aggression. Avoid any direct eye contact

Move slowly - don't make any sudden movements

If possible, just go about your business and ignore him

If
he has you cornered, or is blocking a doorway so you can't get past
him, either make a loud noise or splash him with some water (a small
amount will do, there's no need to drench him!) Both of these acts should scare him away from his spot so you can get out of his way

Most cats - possibly with the exception of un-neutered tom cats - don't actually want a fight. They don't enjoy being hurt or the prospect of it.

Their
reason for hissing and all the other aggressive body language that goes
with it is to try and frighted off the person / cat / dog etc. who it's
directed at so that a fight can be avoided.

For this reason, if you follow my advice above, you'll stand the best chance of coming away from the exchange unscathed. Click here for more detailed information on dealing with hissing cats.